Freeport McMoran Copper & Gold Inc. (Ticker: FCX)

Bought a 4% position in Freeport McMoran Copper & Gold Inc. (Ticker: FCX) at $99.84.

Freeport McMoran is the largest publicly traded copper company in the world. It also mines gold and molybdenum, which is used in steel production. The position expects to take advantage of increasing copper prices, driven by rising demand in developing countries and the high-tech industry. The company should also benefit from the strong price increases in gold and the demand for steel production in developing countries. As highlighted in the company's 10Q compared to spot prices, there should be upside to the company's outlook of $5 billion in operating cash. This suggests higher earnings in 2011 and the company raising the dividend at year end, should commodity prices remain strong.

"Based on projected consolidated sales volumes for 2010 and assuming average prices of $3.00 per pound of copper, $1,200 per ounce of gold and $14 per pound of molybdenum for the remainder of 2010, our consolidated operating cash flows for the year 2010 are expected to exceed $5 billion (up 14% y/y), net of an estimated $0.2 billion for working capital requirements. The impact of price changes on operating cash flows in 2010 would approximate $150 million for each $0.10 per pound change in the average price of copper, $30 million for each $50 per ounce change in the average price of gold and $25 million for each $2 per pound change in the average price of molybdenum."
  - FCX most recent 10Q

Copper prices have been increasing and currently sit at around $3.80 per pound.
Gold prices have also increased dramatically throughout the year and sit at around $1,377 per ounce.
Molybdenum's outlook remains robust and the price is around $15 per pound.

Trading at 11x 2011 EPS estimate of $9.04 (16% growth over 2011 estimate) with a dividend yield slightly greater than 1%.